Contrary to the perception that foreign aid is the key to eradicating poverty in Africa, is the fact that economic freedom can only be realized through the creation of open and effective economic institutions in poor African countries.
Foreign aid is not a requirement for development and as witnessed in most third world African countries, it has led to overdependence on foreign aid. It does so by creating the impression that western countries are rich and thus expected to offer assistance to poor countries. A typical case scenario of any African country exhibits the tendency for third world countries to offer labor, raw materials, and markets for western donors giving them sustainable growth at the expense of the poor. In addition, poor countries embrace foreign aid and fail to create other development incentives, which worsen the state of poverty. Another factor, which arises from foreign aid, is oppression. Bauer and Yamey (1989), contend that as recipient governments’ powers and authority are heightened by foreign aid, conflicts are bound to ensue due to the politicization of life. That is, governments utilize foreign aid to fuel political agendas and develop policies, which aggravate poverty and hinder growth.